Motorists again are digging deeper into their pockets at the gasoline pumps, and they may need to dig even deeper as prices are expected to continue to rise.
There are several reasons for the recent increase - most people are paying $3.199 a gallon for regular unleaded - but the biggest reason is the price of crude oil.
"We expected the average for the winter to be about $84 a barrel, but it is close to $92 a barrel now. That has translated to the higher gasoline prices at the pump," said Laurie Falter, an economist with the Washington, D.C.-based U.S. Energy Information Administration. "We have seen a $5- to $6-a-barrel increase since our last Short Term Energy Outlook came out [in December], and that has had an impact on the price at the pump.
"We think we will continue to see some moderate increases in prices, but we don't expect to see the fast and high spike increases that we saw in 2008. We do not expect to see it go up as high as $4 a gallon."
We are seeing the trickle down effect at the pump, AAA East Central spokeswoman Bevi Powell said.
"This was the first Christmas that the national average was above $3 a gallon. Back in 2008 when we hit $4 a gallon, by Christmas the price had fallen," she said.
Gasoline supplies are lower than usual for this time of the year.
In the fall, U.S. refineries go into regular seasonal maintenance to update their equipment. However, the fall maintenance coincided with a general nationwide strike in France, which led to a shutdown of terminals and refineries there, Falter said.
"Because of that, they were not producing fuel, and France drew the gas supply from the rest of Europe that we would be getting here," Falter said. "In the U.S., crude production was down because maintenance lasted longer than expected. That lead to a drop in gas inventories in the East and Midwest. We went from where supply was well above the five-year average to well below that figure."
Gasoline demand has increased in the U.S.
"The four-week average is about 3 percent higher than at this time last year," Falter said. "We have seen some modest recovery in demand, we are seeing an upward trend."
The economy has an impact on the price of crude oil and gasoline prices, Powell said.
"It has been driven by trends on Wall Street. When there is positive news, the prices tend to go upward; when there is negative news, they fall," she said. "News of the economy picking up is driving up the price as well."
Gasoline prices are expected to continue their upward trend.
Powell said it is hard to make a prediction because many factors are involved.
"Anything weather-related or anything that affects the supply and demand has an impact at what we pay at the pump. This is usually the lowest time of the year. In the spring, we typically see an increase in prices - that doesn't bode well for the spring," Powell said.
